Silver Lake, Singapore’s sovereign wealth fund GIC and BlackRock are investing $650m in Klarna, valuing the Swedish “buy-now, pay-later” group at more than $10bn ahead of a likely stock market listing by the most valuable private fintech in Europe.

Silver Lake, the US private equity group that has been investing heavily during the coronavirus crisis, is putting $500m into the Swedish group alone as Klarna makes a big push into the US ahead of a probable IPO there, said people familiar with the deal. It has also snapped up stakes in Airbnb, Twitter, Expedia and Reliance Retail.

The new fundraising — with investment from HMI Capital — means Klarna’s valuation has doubled in a year to $10.65bn. It was last valued in August 2019 at $5.5bn, already making it the joint most valuable private fintech in Europe, but has since enjoyed rapid growth in the US with its revenues increasing by more than a third in the first half of this year despite the pandemic.

Egon Durban, Silver Lake’s co-chief executive, said: “Klarna is one of the most disruptive and promising fintech companies in the world, redefining the ecommerce experience for millions of consumers and global retailers, just as ecommerce growth is accelerating worldwide and rapidly shifting to mobile.”

TCV, the US venture capital group, bought shares off existing shareholders as did Merian Chrysalis, Northzone and Bonnier. Existing investors in Klarna include Sequoia Capital, private equity firm Permira and China’s Ant Group.

Klarna said it would use the $650m in fresh equity to accelerate its growth, expand globally and improve its product offering.

READ ALSO  US initial jobless claims resume their slow decline

Sebastian Siemiatkowski, co-founder and chief executive of Klarna, said: “We are at a true inflection point in both retail and finance. The shift to online retail is now truly supercharged and there is a very tangible change in the behaviour of consumers.”

He told the Financial Times last month that the Covid-19 pandemic had accelerated Klarna’s growth and that the Swedish group — founded in 2005 by him and two business school friends — was inching closer to an IPO that was likely to happen within “one or two years”.

Klarna took the idea of factoring — customers only paying when they received an invoice — and applied it to online shopping, becoming well-known for ecommerce payments first in the Nordics and Germany, then in the UK and finally in the US.

It increased the number of customers in the US six-fold in the first half of this year compared with a year earlier. It makes money by charging retailers such as Ikea, H&M, Nike and Asos fees for taking the payment risk on online buyers.

Klarna also gained a banking licence in Europe and has started offering debit cards and savings accounts in Sweden and Germany.

Via Financial Times